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Day: September 17, 2009

Expressing an opinion can be risky, events may prove you wrong. However. this can be avoided if you include most of the available opinion options in a commentary.

Welcome to the “no comment” commentary or: “We might not always be right, but we are never wrong”

Here is my commentary on today’s Lex piece on Baidu. I have italicised the tentative interpretation of events, the sum of which is zero.

“In the wake of the storm over “trading huddles”, there are new mutterings of investment bank tip-offs to preferred research clients. Consider Baidu, the $14bn Chinese search specialist listed on NASDAQ. The stock had an uneventful summer, beginning July at $301 and ending August at $330. At about 10am on Friday September 4, it suddenly surged against a flattish benchmark. By 1pm, the stock was up 5 per cent. Over the next three trading days, it continued to rise. On September 11, Goldman Sachs upgraded earnings estimates, with a higher target price – $475 – than any of the 23 brokers on the street. On Wednesday, Baidu broke through $400.

Other factors than a trading huddle might explain Baidu’s ascent. After the market close on September 3, Dow Jones Indexes announced that, as of September 18, Baidu would be one of three stocks promoted to its Bric 50 Index. On the morning of September 4, Google – Baidu’s big rival – also said its president of Chinese operations was stepping down.

Neither event provides wholly satisfactory explanations. The two other stocks attracting new demand from tracker funds, Brazil’s OGX and India’s Jindal Steel & Power, jumped less on September 4, and have since risen half as much. And while investors may be extrapolating gains for competitors at Google’s expense, China’s other leading US-listed portals, such as Sohu and Sina, have been left in Baidu’s dust.

Stock price moves, alone, are inconclusive. More decisively, Goldman says it had no “huddle” on September 4, when Baidu began to rise. Still, as the least blemished institution throughout the crisis, it remains an obvious target for grievances over some of the shady practices that fomented it. The vampire squid will be harpooned for a good while yet.”